A new report from ILC-UK argues that increasing the state pension age without taking into account the 18 year difference in healthy life expectancy across the UK, risks disadvantaging groups of older people.
The report "Linking state pension age to longevity: Tackling the fairness challenge", published as part of the Age UK Research Fellowship demonstrates that measures such as healthy life expectancy and disability-free life expectancy vary significantly by region and social class, and in consequence particular groups are more likely to be disadvantaged by a rise in the state pension age than others.
• While most people will live to state pension age and beyond, a large proportion are unlikely to reach state pension age in good health, particularly in some parts of the UK, with Glasgow City having a healthy life expectancy of just 46.7 years – a near 20 year deficit from the current SPA of 65.
• Males in more disadvantaged areas and lower social classes are unlikely to reach state pension age free of disability, while those in the lowest social class have a disability-free life expectancy 13.4 years lower than males in the highest social class.
• The additional benefits tied to the state pension age, such as the free bus pass, will on average, not be available to those from lower social classes until well beyond their healthy life expectancy.
• Although life expectancy and disability-free life expectancy have increased over time for most groups evidence suggests that health gaps are continuing to widen. The difference in disability-free life expectancy between women born in the most and least deprived areas was 11.6 years in 2001-04. By 2007-10 it had increased to 13.4.
The report also highlights how the disparity between life and healthy life expectancies may offset the perceived financial benefits of raising the state pension age:
• Increasing state pension areas into ages where disability rates are higher, raises concerns about transferring spending from the state pension to disability and unemployment benefits. From 2009 to 2011 there was a considerable increase in the proportion of employed men and women reporting a long-term health problem or disability.
• Raising state pension age in line with life expectancy could result in increasing numbers of people leaving the workforce before reaching state pension age in order to care for friends and family. Currently it is a key reason why women aged over 50 leave the workforce.
The report makes a series of recommendations to policymakers, including to Government:
• Five yearly reviews of state pension age, as detailed in the 2013 Pensions White Paper, should incorporate an examination of changes in healthy life expectancy and disability-free life expectancy as well as inequalities in these measures across different social classes and UK regions.
• As state pension age increases, there must be continued investigation into the reasons for leaving work and retiring. This will help identify whether disability and poor health become a greater barrier to workforce participation as state pension age increases.
• The recent increase in the proportion of employed men and women reporting a long term health problem or disability should be examined to explore what is driving these changes.
• Health promotion strategies should target poorer social classes to ensure reduction rather than increases in health inequalities between classes.
Baroness Greengross, Chief Executive, ILC-UK, said:
"As we live longer lives it appears to be a natural move to raise the state pension age. Yet as this research shows, we need to be very careful to ensure that increasing the state pension age doesn't just result in an increase in the numbers of people out of work and ineligible for state pension. This report highlights that the highest social class are likely to live 13.4 years longer disability-free life than the lowest. Central and local Government must concentrate greater effort on tacking the causes of inequalities which result in such huge divergences in life expectancy".
Caroline Abrahams, Charity Director at Age UK, added:
"This research backs up what we've known for some time – that increasing the state pension age based purely on longevity will leave many people facing serious problems in later life. While it may seem reasonable to consider extending working lives as overall life expectancy increases, it will be especially tough on people with lower life expectancies – who are likely to be on lower incomes – who may end up with little or no time left in retirement to enjoy. Those who are unable to work longer due to ill health or caring responsibilities must be given the support they need, when they need it.
"The current Pensions Bill going through parliament should oblige government to take into account a range of factors before they consider raising the state pension age, such as the difference in healthy life expectancy and varying employment opportunities for continued working in later life."
Ben Franklin, Research Fellow at ILC-UK and one of the report's authors, said:
"This report demonstrates that raising the state pension age in line with life expectancy could have a number of unintended consequences. If increasing numbers of people leave the workforce before reaching state pension age – to care for loved ones or due to poor health – the economic and fiscal benefits of raising state pension age will be lost. And with such significant health inequalities across the UK, there is the very real possibility that the vast majority of people from some local authorities will fail to reach state pension age in good health. Improving the quality of life and not just the quantity of life is critical to ensuring that reforms to state pension age are successful in supporting longer working lives in a fair and equitable way."
Paul Kitson, pensions partner at PwC, who will be hosting the launch event, commented:
"As this research shows, not all pensioners are equal, the better off tend to live longer than those who are not so well off. While it is clear that state pension age needs to increase, the difference in healthy life expectancy between the different socio-economic groups raises questions over whether a one size fits all state pension age is the right answer."